Marijuana: Allegan city mulls opting in or out

Allegan City Council listened to a presentation by city attorney Nick Curcio on the recently passed recreational marijuana state law and its impact on the City of Allegan.

Council members took the information under advisement on Nov. 13 and made no decisions on whether to opt in or opt out of allowing marijuana establishments in city limits.

City manager Joel Dye said the council will be asked in January or February to decide which way to go.

In 2016, the council expressed no interest in legalizing medical marijuana sales in the city after hearing a presentation by the West Michigan Enforcement Team and the Allegan County Substance Abuse Prevention Coalition on how marijuana affects communities.

If opting out again, voters do have the right to initiate opt-in ordinances to override opt out with a ballot initiative.

Proposal 18-1 was a statewide ballot initiative to legalize recreational marijuana and adopt the Michigan Regulation and Taxation of Marihuana Act (MRTMA).

The initiative passed statewide with 57 percent approval; in the City of Allegan, it passed with 58 percent of the vote.

The effective date is Dec. 6, which is 10 days after the Board of Canvassers certified the election results.

Once effective, state law will or older to:

• Possess 2.5 ounces of marijuana in public

• Possess up to 10 ounces of marijuana and up to 12 marijuana plants in one’s home

• Consume marijuana in non-public places

• Transfer up to 2.5 ounces of marijuana to another person, as long as no compensation is received

These provisions apply regardless of whether a municipality opts in or opts out of the scheme.

However, the act allows employers to discipline or terminate workers for marijuana use, pursuant to an established drug policy.

The sale of marijuana will still be illegal under state law, unless the person making the sale has a state license issued by the Department of Licensing and Regulatory Affairs.

LARA is required to start issuing licenses under the new act within one year of its effective date.

The licensing scheme will largely mirror the scheme established by the Michigan Medical Marihuana Facilities Licensing Act (MMMFLA) passed in 2016.

The MRTMA defines “marihuana establishments” as a new statutory term for marijuana businesses to encompass the five MMMFLA facilities (growing, processing, testing, transporting and storing; and selling), as well as two new business types:

• The Marihuana retailer sells or otherwise transfers marijuana to marihuana establishments or to individuals 21 and older.

• The Marihuana microbusiness cultivates up to 150 plants, processes marijuana from those plants and sells or transfers it to individuals 21 and older or to safety compliance facilities.

Interpretation issues:

In some circumstances, it may be difficult to determine how the new marihuana act fits together with existing marihuana acts already on the books. This includes identifying identical terms differently; the new act not mentioning provisioning centers; and with the new act appearing to create regulations for all “marihuana establishments,” including those facilities already created under the previous act.

Courts may likely find that the previous acts continue to apply, except when the new act directly conflicts. Court cases and administrative rules may clarify other aspects as well.

Opting in or out

Like the previous act, the new act allows municipalities to choose whether to allow marijuana establishments within their jurisdictions, and to limit the number of establishments.

However, the new act appears to flip the default status from “opt out” to “opt in,” which means a municipality choosing to prohibit marijuana establishments must adopt an ordinance in order to do so.

To opt out, the new act does not provide such guidance regarding the form or content of an opt-out ordinance but a fairly simple regulatory ordinance would likely suffice.

This ordinance should be in effect by the time LARA starts processing applications (within one year). Otherwise, LARA will treat the municipality as an opt-in community and issue licenses to qualifying applicants.

If opting in, municipalities can adopt ordinances that limit the number of establishments of any given type. It also appears that municipalities can still regulate establishments through zoning ordinances, although the new act does not expressly refer to zoning.

Opt-in ordinances can still charge marijuana-related businesses an annual fee up to $5,000.

Possible zoning regulations

Communities opting in have adopted regulations that include limiting establishments to commercial or industrial zones, special-use requirements, signage regulations, site layout requirements to increase site security, distancing from sensitive uses (schools, churches, parks, etc.), distancing from like uses, odor control measures and set layout requirements to mitigate impacts on neighbors.

New considerations for opting in include: regulations cannot be unreasonably impracticable; municipalities can require establishments to obtain local licensing as well as state licensing, and if a municipality places a numerical limit on establishments, it must create a “competitive process” to choose among applicants, such as lotteries, first-come-first serve or a scoring system.

Municipal revenue streams

Municipalities can charge an annual fee of up to $5,000 to defray costs. The new act eliminates the 3-percent excise tax on medical marijuana provisioning centers. In its place, there is a 10-percent tax on sales by recreational retailers and microbusinesses.

Specifically, after certain payments are made to the state and federal programs, 15 percent of the remaining revenues are allocated to those municipalities in proportion to the number of retailers or microbusinesses within their jurisdictions.